S hippers, know thyselves.That is the core message to shippers preparing to engage in the Request for Proposal (RFP) process with carriers. A shipper’s instinct can be to look out at the vast landscape of carriers without gazing inward rst, but they cannot afford to skip the critical initial step of thoroughly understanding their own pro le before negotiating a transportation contract with a carrier. “That understanding comes from knowing your data,” says Micheal McDonagh, president of parcel for Louisiana-based third-party logistics provider AFS Logistics. “Be able to answer questions about your zones, packaging, weights, customers, destinations, and more.” The RFP process is a crucial one for shippers and can set the stage for supply chain success. Shippers who approach the process by prioritizing planning, transparency, and communication are most likely to achieve results. Scope of services, terms, service levels, and performance metrics can all ow into place through a diligent process built on a proper foundation. Despite the importance of RFPs, shippers do not always put in suf cient time to plan beforehand. “Not sitting down and planning your strategy for the year is a big mistake,” McDonagh says. “Are you changing products? Are you growing? Where’s your volume going? Is your pro le as a shipper changing? You also need to have those conversations and strategic planning sessions far enough in advance of an RFP so you know what is acceptable to negotiate based on your business needs.” Here are other steps to optimize the RFP process. Build relationships with carriers. An effective RFP targets carriers who are the best possible t rather than casting a too-wide net. For that reason, shippers need to know not just themselves but also have a clear understanding of the capabilities and limitations of each potential provider. “Relationships, new or longstanding, are key,” says Sean Burke, chief commercial of cer for Echo Global Logistics, a Chicago-based provider of technology-enabled transportation and supply chain management services. Shippers can save time by being selective in the carriers they engage in an RFP. “Carriers have certain types of freight they’re not interested in, whether it’s the lane pro le, mix, geography, or another factor,” notes Kevin Day, president of LTL for AFS Logistics. “For example, a carrier may decide that handling large grocery or retail customers is not right for them, making any of that freight a nonstarter,” he explains. “Shippers can streamline their process by ltering out carriers who don’t t upfront. This comes with the bonus of being better for carriers—even if the business isn’t right for them at face value, it still costs them time and money to process the RFP.” Shippers that build a relationship with carriers will have a higher acceptance rate in their lanes. Is it time to negotiate new carrier contracts? Here are the keys to successfully optimizing the Request for Proposal (RFP) process—from building a relationship with carriers to adapting to conditions as they change. By Tom Gresham
January 2024 • Inbound Logistics 157
Powered by FlippingBook